The authorities hope to launch a land market in Ukraine from July 1, owners in need dream of selling their shares, and farmers are preparing to buy them out. An informal land investor club loomed on the horizon.

Promoting land reform in Ukraine

On July 1 this year, a land market opens in Ukraine. The law No. 552-IX on land turnover, which the Verkhovna Rada adopted in March last year, comes into force. Formally, it is a historical event. After all, the owners of agricultural land plots will finally have the full right to sell their land. And farmers - to move from leased situational production to systematic management on their own land.

A considerable delay in the entry into force of the law was due to the desire to adequately and comprehensively prepare for the cardinal changes in the land sector. And now the second decade of the moratorium on the sale of land in Ukraine ends, and 10 months have passed since the date of the signing of the historic law by the President of Ukraine. A little over 100 days are left before the land market opens. The Page found out to what extent the country is already ready for a historic event and what needs to be done immediately in preparation for it.

Over the past 10 months of land reform in Ukraine, in addition to the aforementioned law on the turnover of agricultural land under pressure from the West, at least three more important regulations were adopted. First of all, these are the laws on the National Geospatial Data Infrastructure (No. 554-them dated April 13, 2020), on the planning of land use (No. 711-IX dated June 17, 2020) and on the creation of the State Agrarian Register (No. from 05.11.2020).

And we managed to get some progress in parliament for the consideration of several other bills on land reform. In addition, the government is trying to resume the activities of the Ministry of Agrarian Policy and Food, which the Cabinet of Ministers disbanded a year ago. The Ministry has already been approved by the main executive body, which ensures the formation and implementation of state policy in the field of land relations. But a full-fledged department will be able to earn at best only from March 2021.

Recently, a pilot version of the National Geospatial Data Infrastructure was also presented. But it still covers only a few cities and several dozen territorial communities. And so far, the "pilot" was presented only to the President of Ukraine, and a nationwide presentation is scheduled for March 2021. Land reform is not blooming, but advancing.

Land rally: will they have time to launch the land market from July 1

If the government continues to move as slowly as it did during the previous year, then even legislatively, it will not have time to ensure the launch of the land market from July 1.

After all, presenting publicly at the end of January 2021 the "road map" of land reform, the new Minister of Agrarian Policy and Food Roman Leshchenko admitted that at least four more laws need to be adopted in five months, three new bills should be developed and about 40 resolutions of the Cabinet of Ministers and others regulatory legal acts.

That is, from April 2020 to February 2021, parliament adopted only four land laws, and seven more must be approved over the next four months. True, four of them have already been approved in the first reading.

These are the following projects:

• on the improvement of management in the field of land relations (No. 2194),
• on the sale of land plots at electronic auctions (No. 2195),
• on the Fund for Partial Guarantee of Loans in Agriculture (No. 3205-2),
• on the right of state workers to a land share (No. 3012-2).

But we must not forget that two of them were submitted to the Verkhovna Rada in 2019 and have not yet become laws. Moreover, one of these projects has been under the watchdog's for 15 months and does not show any signs of progress in the session hall. And one of the projects registered in 2020 was waiting for consideration in the first reading for about seven months. But we still have to wait for the second reading ...

So it is obvious that the passage of land bills in parliament should be significantly accelerated. Perhaps turbo mode is really needed. After all, there is still the approval of a bunch of bylaws, and July 1 is already visible because of the snowdrifts that are quickly melting.

Moreover, now the sparks of land optimism rarely arrive from the Rada. In February, the draft law on the Fund for Partial Loan Guarantee was adopted from the road map only in the first reading.

In addition, in the draft schedule of plenary sessions for March 16-19, bills No. 2194 (repeated) and No. 2195 finally appeared for consideration in the second reading. The Committee on Agrarian and Land Policy also began consideration of the draft law on the right of state workers for the second reading. on a land share.

But when all these projects have a real chance to become laws, given the past land achievements of the people's representatives, it is not easy to predict.

Three more bills of the "road map" - on the transformation of the institution of land use, land consolidation and development of land reclamation systems - generally only at the stage of development. At least in the Verkhovna Rada, they are not registered as draft laws. And the 100-day "flag" of the clock, in chess language, is already rising.

New opportunities for the land market in Ukraine

Having made a bold assumption that the authorities will have time to fulfill the planned "road map", we will get a starting model of the land market in the country from July 1. According to it, 7 million land owners can theoretically enter this market and sell their plots. But, according to various sociological polls, only 6-15% of respondents intend to do this now.

And they firmly decided to sell their share without hesitation - only 3% of the owners, according to a recent study by the Ukrainian Institute of the Future. And another 10% postpone making a decision until the question of the future price of land is clarified.

On the other hand, several times more people are expected to buy land. Consequently, the likelihood that the land market will somehow work is high. But its volume, especially at the first stage (when only individuals can buy), will be small - perhaps about $ 1 billion a year. This is just over 1% of the country's GDP and catastrophically less than the desired level of investment in the domestic economy.

In other words, the land market from the start is expected to be comparable in value to the export of only wastes from the fat and oil industry for feeding livestock (meal and cake). And a significant growth in the volume of the land market should be expected no earlier than 2024, when legal entities will gain access to it.

Who will buy land in Ukrian

And the financial capabilities of potential land buyers are significantly limited. Moreover, in all their main categories, of which, according to experts, there are now three.

The first of them is ordinary traders who now intend to buy land, lease it for two years, and resell it in 2024.

Additional margin on the sale, according to the calculations of specialists (except for receiving rent for the year in the amount of 10-15% of the normative monetary value of the land) - at least 25%. They see land as a new alternative to traditional assets in the form of deposits, real estate and the like.

Even a new informal term has already appeared - the club of private land investors. It is quite possible that this category of buyers is now the most solvent. But not everyone will dare to plunge into a specific market, and few have free funds.

The second category of potential buyers is a large horde of small and medium-sized farmers in business. They may be prompted to buy land by a desire to expand their agricultural production, or simply by the decision of one of the current landlords to sell their land in order to solve financial personal problems.

But farmers have very little money, although they try to accumulate a little before the market opens. Today, farmers admit that, at best, they will be able to buy out about a tenth of the areas they are currently renting. By the way, in Ukraine, according to official data, there are most farms that cultivate only 20-50 hectares of land. Although there are some farmers whose land bank exceeds 1000 hectares of land.

And the third category of applicants for land are representatives of the interests of large agricultural holdings represented by trusted individuals from among the top managers of companies, family members of owners of enterprises, and the like. However, agricultural holdings also have little free working capital.

And the cost of their land lease banks with an area of ​​several thousand hectares, even at the starting prices for land (probably at UAH 30-50 thousand / ha), reaches billions of hryvnias. Therefore, most of the holdings are determined to behave with restraint in the land market, at least for the first two years. By the way, the holdings themselves are also guided by a small share of 5-15% of those wishing to sell their own land shares.

And there are very few ambitious large players who are already planning, for example, to double their land bank. And far from all the land is at the disposal of the holdings. For example, the 100 largest agricultural holdings process only about 15% of the agricultural land in our country.

Banking and other financial institutions could solve the problem of the shortage of funds for acquiring land. But financing programs for land market participants are not yet ready. They say that the appropriate legislative support has not yet been adopted. The circle is complete. And it is expensive for banks to attract an armada of small agricultural producers to their client base, so they are in no hurry.

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